New Goverment 2023, Company winners and losers

[Fortunecookie]

It's obviously at least a 6 month disruption.

Imagine you are 2CC... what do you do? Get your buyers in Japan to load up on EVs, ship them to NZ, process them (a what 3+ month process?) and get them to your yards in the hope you sell them all by the end of the year? Because if you don't you will have to hold lots of EVs in stock no one will buy for a while. Or you could discount them cutting into your profit margin.

Or do you focus on a mix of EVs and gas guzzlers and end up not having enough EVs to sell in the last few months of 2023 and not enough gas guzzlers in the first few months of 2024 as demand whipsaws. Looking at their home page, I see both types!

You could also see big sales of both types and then a quiet period afterwards.

Pretty hard to get the balance right I would imagine. Inevitable there will be some stock write offs and/or margin impact.

Lead times might be even longer for Colonial with new cars.

With reference to used vehicles I tend to look at it differently.
Before and after the removal of the CCD, there will be a set supply of used vehicles(with different mix) across the country at anytime. The purchasers will make purchasing decisions based on stock on hand. Sure they can bring their purchasing decision forward or delay it. But ultimately they must decide based on what is on offer. With that used vehicle dealers will monitor volume, price therefore margins. I think 2CC have and will do well because they have been operating for many years and they have a hand on the pulse knowing what their vehicles are worth at anytime. I don't think you can succeed without being good at that. Unless for some reason someone brought a significant amount of stock (I mean alot) to the market anytime, I cannot see how prices can be materially impacted across the boards because every used car dealership is in the same boat so to speak. In terms of the type buyers they attract, for the majority I don't think they have the luxury of time to wait to get the right car. I believe it is viewed more as a necessity. Quite different to new vehicles, where I think the mindset is different i.e I am paying a significant amount so I want it to be just right therefore prepared to wait.

I'm denying there is not going to be any volatility with stock and sales volume for the next few months. I think 2CC are well place because they have sold about 50% EVs/hybrids year to date and will likely to improve given the petrol environment.

But say I'm wrong and it takes 6 months to adjust. At the very worst consider it a one off event. It is not a long term disruption, it's just a blip if it is that.

[blackcap]

As well as being a one off blip, this change has been extremally well signaled and most firms on the pulse will have priced in (markets were giving Labour a 12% chance of getting in) the change of government and thus an upcoming change in rules and will have positioned themselves such.

If anything, it is a case of business as usual.

[Fortunecookie]

As well as being a one off blip, this change has been extremally well signaled and most firms on the pulse will have priced in (markets were giving Labour a 12% chance of getting in) the change of government and thus an upcoming change in rules and will have positioned themselves such.

If anything, it is a case of business as usual.

Agree. Things were were anticipated.

[Fortunecookie]

The incidence of a subsidy or tax depends entirely on the supply/demand dynamics in that particular market.

This is one reason Labour's GST off vegetables was such bad tax policy. The supermarket duopoly clearly have enough market power to take most of the benefit for themselves. Labour should have proposed an anti-cartel policy targeting the supermarkets. Instead we got another pointless commissioner.

Both the new and second hand car markets are much more competitive and more sensitive to price signals. As the CCD proved, it was supposed to be revenue neutral but it stimulated demand too much, costing taxpayers millions and making it easy for National to attack. Reasonable then to think its removal will depress the market just as much.

The supermarket seem to have alot of power over their suppliers. I think it is a similar situation in the states regarding Amazon. The respective US organisation are wanting to reduce their market power.
Apparently they are using AI to pick up vendors who sell for lower pricing on competing sites and if found to be the case they will kick them off their site. Sounds very similar to the Weetbix situation.


Anyway moving way from supermarkets.
A potential change is to do with CCCFA. I think the majority of people do not know the effects of the changes from late 2021 had on the economy.
At the time of the changes, it would have reduced the borrowing capacity of households between $50K to $100K, all else being equal.
My contention with those changes was that, plain and simple it was fundamentally flawed (idiotic). Some of those changes have rolled back.
You can argue well there was too much cheap money floating around at the time so we needed to tighten credit supply. I will counter and say CCCFA is to assist in the approach to lending and as opposed to being considered as another monetary tool by stealth that the Labour govt relied on(conspiracy theory I know).